Hi @mustgroove,
The determination is made based on any change of the file. If the file has not changed, in any way, within the time period specified, it will unsync. Files are for checked against the auto unsync rule every few hours.

There’s particular folders that are more frequently accessed than others, and therefore less in need of being auto unsynced, so I think this is a good example of why per-folder auto unsync will be a good idea, so that the granularity of this setting can be set on a per-folder basis (which has been mentioned elsewhere).